Samsung Electronics Co. Ltd. has revealed plans to launch a “mobile-first” debit card this summer in a move that could create more competition for Apple Inc.’s Apple Card.

The project, Samsung executive Sang Ahn detailed in a Thursday blog post, is a collaboration between the company and financial technology startup Social Finance Inc., better known as SoFi. San Francisco-based SoFi offers a suite of consumer banking services with a combined 1 million members in the U.S.

Ahn, who serves as the vice president of the Samsung Pay mobile payment service in the U.S., detailed that the debit card has been in the works for a year and will be “backed by a cash management account.” SoFi provides cash management accounts that combine a traditional checking account with savings and investment features. Samsung’s offering will presumably package SoFi’s banking capabilities into a Samsung-branded solution, likely in the form of a companion mobile app integrated with the debit card. 

That’s the approach Apple has taken with the Apple Card, which comes with a companion payments app. Behind the scenes, the Apple Card is powered by partner Goldman Sachs’s financial infrastructure. Google LLC, which is reported to be developing its own branded debit card, is reportedly also teaming up with established banks to handle the financial heavy lifting.

Partnering with an established institution is much faster than building out a banking platform from scratch. Not only is product development faster, but in the case of Apple, relying on Goldman Sachs enabled the company to avoid the hassle of securing its own banking licenses. Similar considerations were no doubt behind Samsung’s decision to ally with SoFi.

If Samsung’s goal is to take on Apple directly, its debit card may offer special incentives to users who buy its products, like the interest-free payment installments Apple Card provides for iPhone purchases.  The iPhone maker also offers low card usage fees as part of its value proposition. SoFi, Samsung’s partner in the project, charges no monthly or overdraft fees on cash management accounts.

Samsung’s upcoming card and Google’s reported plans to join the fray could create a lot more competition for Apple. Such increased competition could be beneficial for users by forcing players in this segment to offer bigger, more attractive card incentives to set their products apart. Depending on how much traction they gain, Google’s, Samsung’s and Apple’s forays into financial service may even create extra pressure on traditional banks to differentiate their products better. 

But the tech giants’ entry into the payment card segment is also bound to raise questions over their access to consumer financial data. To address such concerns, Apple has implemented privacy features in the Apple Card to give users control over how their transaction records are used, a step Samsung and Google could take as well.

Photo: Samsung